Creative Shari‘ah compliance can be defined as compliance with the letter but not the objectives of Shari‘ah. In recent years, Islamic finance industry practises have come under scrutiny, with strong critiques levelled against many institutions that claim to provide Shari‘ah-compliant Islamic financial products and services, while such products and services in fact undermine the spirit and the objectives of Shari‘ah. Financial instruments based on the profit- and loss-sharing model are deemed by Shari‘ah scholars and Muslim academics to be the most compliant with the objectives of Islamic law. Nonetheless, research has shown that they are the least practised forms of Islamic finance; in contrast, institutions offering Islamic financial services (IIFS) offer mainly debt-based instruments. While many researchers have noted this gap between the theory and practise of Islamic finance, no study has provided a sustained analysis of the issue. This thesis undertakes such analysis and, in doing so, significantly contributes to the sphere of Islamic finance in three main ways. First, it critically appraises justifications of creative Shari‘ah compliance practises. Second, it examines how Shari‘ah supervisory board )SSB) governance practises and the inconsistent fatwas (Islamic legal opinions) issued by SSBs contribute to the issue of creative Shari‘ah compliance in contemporary Islamic finance. Most importantly, it suggests regulatory mechanisms which regulators can employ in Islamic countries such as Saudi Arabia and in secular countries such as the United Kingdom to deal with the issue of creative Shari‘ah compliance. This thesis concludes that creative Shari‘ah compliance is not a phenomenon new to Islamic law, but it is one that has no solid justification in Islamic jurisprudence. This study suggests two public mechanisms to remedy the issue of creative Shari‘ah compliance: establishing central Shari‘ah supervisory boards and enforcing compulsory disclosure. In addition, it proposes private mechanisms to remedy creative Shari‘ah compliance which can be employed without governmental involvement. These mechanisms include adopting a Shari‘ah compliance rating, Shari‘ah indices, private Shari‘ah auditing, international standards related to enhancing Shari‘ah compliance, and a whistle-blowing policy for serious Shari‘ah compliance violations, as well as characterising an IIFS in its articles of association as an entity that fully complies with Shari‘ah ruling. These remedies are particularly useful when an IIFS is operating within a jurisdiction where regulators cannot or prefer not to be involved in regulating Shari‘ah governance.
Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:632911 |
Date | January 2014 |
Creators | Alkhamees, Ahmad |
Publisher | University of Warwick |
Source Sets | Ethos UK |
Detected Language | English |
Type | Electronic Thesis or Dissertation |
Source | http://wrap.warwick.ac.uk/65045/ |
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